How Much is Enough

[RetireAge50]

For the past 24 years, we have invested 3 out of every 4 discretionary dollars. This has caused us to live a lifestyle which was comfortable but without a lot luxuries such as travel, cars, fancy restaurants, etc.

The primary objective was to retire as early as possible. We could retire now (Ages 47/46) and live the same way we have always lived.

However, we will likely work a few more years so that we will be able to "live the good life". Basically everything we earn from now until we retire can be spent on "wants" like travel, cars, giving, rv's, etc. etc.

How did you all decide how much "good life" budget you wanted in retirement?

 

[Midpack]

I used to think I wanted the (financial) "good life" in retirement, but we came to the realization aspiring to the same lifestyle while working and in retirement made the most sense for us. Some people live the good life in retirement by "depriving" themselves before retirement, and some live the good life while working and (work longer or) have to live (much) more modestly in retirement - neither appealed to us. YMMV

 

[NanoSour]

I think we're all creatures of habit. And they are very hard to break.

 

[pb4uski]

+1 with Midpack. For us it was a delicate balancing act between not depriving ourselves while we were working but still prudently saving for retirement. We got the right balance for us and are now enjoying the benefits.

Our good life is having enough to live where we want, enjoy leisure activities and a modest vacation or two a year. We have more than enough to do that so the rest is for financial security and ultimately, our heirs.

To thine ownself be true.

 

[bbbamI]

How did you all decide how much "good life" budget you wanted in retirement?

I looked at what we were spending during the w*rking years and kept that as our budget in retirement. I've built in an extra 25% percent of fluff just in case we encounter fun fluffies or the not so fun fluffies.

 

[SJ1_]

I used to think I wanted the (financial) "good life" in retirement, but we came to the realization aspiring to the same lifestyle while working and in retirement made the most sense for us. Some people live the good life in retirement by "depriving" themselves before retirement, and some live the good life while working and (work longer or) have to live (much) more modestly in retirement - neither appealed to us. YMMV

I feel the same way. The only luxury before retirement was travel and our
only luxury after retirement is travel. So we pretty much live the same.
We do not feel that we are depriving our self at all, just the way we live.

 

[Alan]

Fear of the health insurance unknown kept us working 3 years beyond the time we had reached what I reckoned was FI at age 52. Our "good life" in retirement was to be the same as we had while working except more spending on travel. Working those extra 3 years to qualify for the company retiree health insurance added a lot more fat to our ER budget and it meant we missed the Great Recession.

 

[H2ODude]

We've ended up with considerably more retirement income than needed for current lifestyle, which is above former. Part of the problem for many of us is that living a life in which a dollar means something (as in what it took to earn it/save it) means that just because you have a lot of them (now) doesn't make it easy to part with them. We could afford to upgrade home and cars, but don't see the point of it. Travel, yes.

 

[Midpack]

Several people have noted they have more than needed, and history is indeed on their side. Not to quibble at all, but all we can "know" is the past probabilities that our nest eggs would have been enough some high % of past (sequence of) returns over applicable time frames. For all we know, too much may not be enough in the 30, 40 or 50 (OP targeting 46 yo) years ahead...another possible reason to go easy on the good life in retirement, at least for the first half or so.

And those above who have more than enough, are already well aware that past does not predict the future. All we can do is plan to the best of our ability, have a plan B (C, D, etc.) thought out, and enjoy life as it comes.

 

[scrabbler1]

I looked at what we were spending during the w*rking years and kept that as our budget in retirement. I've built in an extra 25% percent of fluff just in case we encounter fun fluffies or the not so fun fluffies.

+1

When I was putting together my ER plan back in 2007-08, one requirement of it was that my day-to-day lifestyle would not change after I ERed. That included a surplus or cushion (your "fluff") of investment income over expenses as well as a slush fund avaiable to cover anything else I wanted to do for fun (or not for fun).

 

[HFWR]

Without delving into specifics, my retirement slush funds will support a yearly income of $40k, possibly higher, gross. Luckily, I have subsidized HI, a very manageable mortgage, and I'm cheap. Variables include how much longer I w*rk, and how long I wait to start SS and a small state pension. But to answer the question of how much is needed: 'bout that much...

Edit to add that I'm 59, so not an extreme early retirement by any means!

 

[panacea]

We're about the same age as you, retireage50, and also not FIREd yet. Our retirement spending projections reflect our current spending (reduced for FICA taxes, paid off mortgage, etc.) plus an increase for travel and entertainment. If we decide to stay in a cold weather climate we want to have enough in the budget to leave for Florida or somewhere warm for a month or two. I'd also like to be able to take some fun classes like cooking, guitar and definitely photography- have you seen all the photos in the recent photo thread? Very cool...

 

[RetireAge50]

So if investment level A is:
1. Desired lifestyle
2. Cushion for downside scenarios
3. More cushions/plans A-D just in case

Then i(f desired) keep working to get to investment level B to include:
1. Big ticket items like RV's, boats, houses with views, extensive travel, or any items you deferred during working years.

I'm content with level A but now all of a sudden level B items are within reach so makes me pause to consider them...

 

[RunningBum]

It's nice to have extras, but it's more nice to have enough that I'm not stressed about running out.

 

[LARS]

You know how much you need to retire? 50% more than you have... ha ha.

The real point is it can become a moving target unless you can control/understand needs vs. wants. And only you can do that for your given idea of retirement.

 

[Badger]

We've ended up with considerably more retirement income than needed for current lifestyle, which is above former. Part of the problem for many of us is that living a life in which a dollar means something (as in what it took to earn it/save it) means that just because you have a lot of them (now) doesn't make it easy to part with them. We could afford to upgrade home and cars, but don't see the point of it. Travel, yes.

+1
I was not as interested as some on retiring early since I enjoyed working in academia. It was the career path I wanted. We were frugal and enjoyed many activities that happened to also be inexpensive so even with short pay we were able to put money aside without feeling deprived.

Our savings plan was simple since neither of us have training in personal finance or investing. Pay off the house in 5 years since the interest no longer helped to itemize our taxes. Then each of us put the maximum into our 403b accounts, the maximum into our Roth IRAs and any left over went to taxable mutual funds. Everything was invested in no-load, low annual expense, reputable mutual funds.

Eventually I realized with our choice of lifestyle that we could easily retire and not worry about running out of money, medical would never be an issue (Medicare plus Tricare for Life), and we could continue to live in a modest but paid for home within a desirable town and neighborhood that was becoming more valuable as new and much larger homes were replacing homes like ours. That was when I knew we reached our "Good Life Budget".

We understood the difference between need and want. Retiring with no worries and being financially secure trumps spending money on things that really didn't boost the happiness meter. The struggle now is trying to spend money without just wasting it. So now we have the chance to treat the kids, grandkids, and greatgrandkids with something when they are least expecting it.

Cheers!

 

[Gumby]

My goal is to have the same lifestyle pre- and post-retirement, both of them pretty darned good.

 

[Jackson D]

It sounds like you are in a great place financially. I was in a similar position 5 years or so before I actually retired. What my wife and I did at that point was to tilt the balance a little more towards experiences in the present rather than saving quite so much for the future. We started taking better vacations and created a lot of wonderful family memories in the process. Our overall spending went up a bit too, but by that time our investments were growing more by investment gains than they were by what I added so it didn't seem to matter.

 

[Islandtraveler]

I believe that we need to prepare for the worst and hope for the best. Following this logic to its conclusion require us to calculate a bare bones budget that we need to get by verses a projected budget that we have a reasonable idea that we can maintain.
During our acquisition phase, we have been careful to plan for a budget through the reduction of expenses on our primary residence. (New roof, HVAC , Solar power and septic) As one of the members of the community once aptly put, “It requires about $30,000 to produce $1,000 of annual income”
Keeping this equation in mind during the planning phase has made it easier to resist the temptation of the “Alligators” that increase the budget accordingly. Once the financial floor has been put in place, you can use the fun money without regret.
Retirement calculators and budgets are great tools and may give us some feeling of security but they are in no way a guarantee of success. I believe that we are living in financially tumultuous times and the outcome of some radical monetary strategies will not be known for years. The future is certainly going to look like the past, only different.

 

[jollystomper]

As part of our FIRE planning over the last 2 years, we have performed "simulated retirement budget" testing every several months, where we have test living against various budget levels to determine "bares bone" vs "extravagant" and finding out what is a happy medium. It has been very helpful to in forecasting (as best as possible, knowing there are always unknowns) our expense range, and we have been pleasantly surprised how this exercise is helping validate a comfortable level of retirement living for us.

 

[daylatedollarshort]

How much is enough is an interesting question. Years ago I would have made the number a lot higher than what we have now.

I'm actually reading a book now from the library called How Much is Enough? It is based on Keyne's predictions that productivity improvements would allow people to work 15 hours a week. So what went wrong? Productivity improvements in the work place have indeed happened, so why are people often working more, not less?

These last few years the whole voluntary simplicity and urban homesteading type movements have really opened my eyes to how much we could cut our expenses, get rid of clutter and lead simpler, happier lives with lots of free time. And actually do it now, not in one more year or ten years, but now.

 

[butterfly]

I like the question. My answer changes daily.
We have hit the enough number, but we still wonder: if we worked another two years we would have $$$, but when do you stop?
We have a zillion business ideas if we want to earn more money and as we will be 41 and 38 when we pull the pin next year there will be plenty of time to try stuff out.
I suppose for us, with two young children, the enough is to provide for them as well as us.

 

[Shabby]

but when do you stop?

Great question and as a guy about 18 months away from being able to FIRE, I struggle with this exact question. If I work just 12 more months I will have another $XXXk.....but when does it stop. It makes me a little crazy.

 

[butterfly]

Great question and as a guy about 18 months away from being able to FIRE, I struggle with this exact question. If I work just 12 more months I will have another $XXXk.....but when does it stop. It makes me a little crazy.

I hear you!!!! We have done so many calculations on various options I swear I can hardly see the numbers on the calculator anymore...

 

[MRG]

I hear you!!!! We have done so many calculations on various options I swear I can hardly see the numbers on the calculator anymore...

I was 'there' for a couple of years. In the end, for us, it was the BS bucket got fuller more than the number changed. YMMV

Best wishes,

MRG